Millions of households paying more than £1,000 a year for their mobile phones after firms use VAT hike to force up bills

Mobile phone giants are using the VAT rise as cover for a hike in some charges of up to 150 per cent, research suggests.

In theory, the 20 per cent sales tax should add an average of £22 per household to the average annual bill, assuming three people own mobiles – taking it to £1,040.

However, customers of some networks – particularly 3, O2 and Vodafone – could suffer much bigger rises.

Rising costs: The VAT increase could take annual mobile phone bills to over £1,000 a year

The warning comes as it emerged ten million people locked into monthly
network-subsidised contracts pay £200 a year too much for the mix of
calls, texts and web access.

Most people pay a set monthly fee - perhaps £30 - for a package with a set allowance of calls, texts and other services. There are extra charges for calls and services made above this allowance.

It has emerged that new customers signing up to a Three pay monthly tariff will pay 30p a minute for calls above the package allowance. This equates to an increase of 150per cent on the previous figure of 12p.

The charge for texts outside the allowance is also up from 12p to 30p.

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All Three customers not on its One Plan will also now be charged for voicemail, and those opting to receive paper bills will be charged £1.50 a month, up from £1.

O2 has also re-jigged its pricing. While pay monthly customers have seen calls and texts rise in line with VAT, its pre-pay customers have witnessed a 20 per cent rise in the cost of text messages, from 10p to 12p.

Vodafone’s roaming customers should beware that using their handsets in Europe will be more expensive.

Wary: Vodafone customers could face a large increase in their roaming charges

The charge to make calls is up 1p a minute to 39p. There has also been a penny rise in the cost of receiving calls, taking the price to 14p a minute, and sending texts, which is up to 11p.

Ernest Doku, communications expert at uSwitch.com, said: 'These increases will be a bitter pill to swallow for the many consumers trying to stay afloat amid the VAT hike.

'The cost of a text going up by two pence may not sound like much, but the cumulative effect on a monthly bill can be substantial.

'The good news is that consumers could offset these price rises by reviewing their mobile usage and moving to a better deal.'

The price comparison website Billmonitor is accredited by telecoms regulator Ofcom to provide reliable data on the best and cheapest mobile deals.

Its computers, developed by a team from the University of Oxford, are able to search through more than 10 million possible tariff and handset combinations.

The website's research shows that the vast majority of people on a contract has a package of calls and other services that is too large for their typical monthly use. As a result they are paying for services they never use.

Co-founder, Dr Stelios Koundouros, a mathematician, said: 'Our research shows 82 per cent of people in the UK have a contract that's too large for them.

'The average UK mobile user has 300 per cent more free minutes than they need and overpays by about £200 a year.'

He said even bigger savings are available if people opt for a contract for a SIM card only, which can be used in any favourite handset.